Mumbai, 18 May (Commoditiescontrol): Sugar futures on the Intercontinental Exchange (ICE) extended their decline on Friday, remaining above Thursday's 18-month low amid expectations of ample global supplies. The July delivery of raw sugar fell by 0.20 cents, or 1.09%, closing at 18.13 cents per pound after dropping to 17.95 cents on Thursday. The contract has decreased by 6% this week. In London, the August ICE white sugar contract also dipped, losing $1.50, or 0.28%, to close at $534.70 per metric ton.
Market sentiment has turned bearish primarily due to the strong start of the sugar harvest in Centre-South Brazil. According to the sugar industry group UNICA, production in this region reached 1.84 million tons in the second half of April, an 84.25% increase from the same period last year. This surge is partly attributed to drier conditions, which might not persist later in the season.
Adding to the market dynamics, Australia's largest sugar producer, Wilmar Sugar, announced that strikes by its employees would delay the start of cane processing. On the other hand, projections from StoneX and S&P Global Commodity Insights indicate significant growth in Brazil's sugar output, estimating the 2024/25 production at 42.3 million tons.
Globally, the sugar market is witnessing shifts in production. Datagro forecasts a modest global surplus of 1.62 million metric tons for the 2024/25 season, reversing the previous season's deficit. This shift is driven by recovering production in Thailand and increased output forecasts from China. Conversely, in India, the Indian Sugar and Bioenergy Manufacturers Association reported a 1.6% year-over-year decrease in sugar production as of April 30, complicating the global supply outlook.
Speculators have increased their bearish bets in ICE U.S. raw sugar futures, with the Commodity Futures Trading Commission (CFTC) reporting a net short position increase of 13,919 lots to 58,274 as of May 14. Despite this, Citi suggests the market's fair value is higher, recommending a long position on the second contract.
Traders are watching these developments closely, with technical support for the July sugar contract seen at 17.98 and 17.82 cents, and resistance at 18.37 and 18.60 cents.
(By Commoditiescontrol Bureau: 09820130172)
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